Gold (XAU/USD) began the week on a weaker note, remaining below the $4,700 mark during the Asian session as renewed US Dollar (USD) strength and persistent geopolitical uncertainties weighed on the precious metal [1]. The optimism surrounding a potential US-Iran peace deal quickly dissipated after both US President Donald Trump and Iranian officials rejected each other's proposals regarding the reopening of the Strait of Hormuz and Iran's nuclear program. The Wall Street Journal reported that Iran refused US demands to dismantle its nuclear facilities and suspend uranium enrichment for 20 years, prompting Trump to call the response 'totally unacceptable.' This escalation in geopolitical risk contributed to upward pressure on crude oil prices and revived inflation concerns [1].
The US labor market also showed resilience, with the Nonfarm Payrolls (NFP) report indicating the addition of 115,000 new jobs in April, surpassing expectations, while the unemployment rate remained steady at 4.3% [1]. These developments, combined with revived inflation fears, have led to increased expectations of a more hawkish US Federal Reserve stance. According to the CME Group's FedWatch Tool, traders are currently pricing in just over a 20% chance of at least one 25-basis-point rate hike by the end of the year [1]. This outlook has favored USD bulls and put further downward pressure on gold prices, as gold is a non-yielding asset.
In India, gold prices mirrored the international trend, falling to 14,347.09 Indian Rupees (INR) per gram on Monday, down from INR 14,477.50 on Friday. The price per tola also decreased to INR 167,343.90 from INR 168,862.70 over the same period [2]. FXStreet notes that Indian gold prices are calculated by adapting international prices (USD/INR) to local currency and measurement units, and are updated daily based on market rates at the time of publication [2].
Looking ahead, traders appear cautious and are awaiting key US inflation data releases, including the Consumer Price Index (CPI) and Producer Price Index (PPI) scheduled for Tuesday and Wednesday, respectively. Additionally, the upcoming US monthly Retail Sales report and speeches from influential Federal Open Market Committee (FOMC) members are expected to play a significant role in shaping USD demand and influencing gold prices [1]. The prevailing fundamental backdrop suggests that the path of least resistance for XAU/USD remains to the downside, with any intraday move above $4,700 likely to be viewed as a selling opportunity [1].
CONCLUSION
Gold prices have come under pressure due to renewed US-Iran tensions, a stronger US Dollar, and expectations of a more hawkish Federal Reserve, with both international and Indian markets reflecting this downward trend. Market participants are now focused on upcoming US inflation data and central bank commentary, which are expected to provide further direction for gold prices. The overall sentiment remains cautious, with the downside seen as the path of least resistance for gold in the near term.